Economic recovery: Aligning expectations with timeous actions

I believe that our economy will rebound this year. But timely implementation of policies and programmes will be critical to realizing this hope. Whether we like to hear it or not, lack of any definitive economic management actions in the first six- months of this administration contributed to our descent to recession in 2016. I have a number of my readers who believe I have an unrealistic and optimistic view of how the economy will perform in 2017. Even my recourse to the support of the World Bank and IMF projections to my views has failed to convince some of them.  But me, I am unrepentant and hold strongly to my view that this economy will rebound this year. ‘But make government no fall my hand’

As I had argued previously, the movement in the global oil market is in our favour with crude oil prices reaching $55 to the barrel last week. Our foreign reserves are growing and some analysts project that we may hit $30 billion by March this year. We therefore expect better funding of the forex market with crude oil sales. But will this be enough? Certainly not. We need a much higher level of capital importation than we have had in the last two years. From a height of $ 21.32 billion in 2013, capital importation has been on the decline going down to $20.72 billion in 2014, descending to $ 9. 64 B in 2015 and almost hid the sack in 2016 at $ 5.12 B. Indeed about 67 % of the 2016 receipts occurred in the 2nd half, following the half hearted effort to float the Naira exchange rate against international currencies in June. If that did not happen, the foreign exchange crisis would have been worse. Quick action is now required to create a unified exchange rate mechanism. Today, we have about six different rates- official or interbank, remittances, bureau De change, refined oil importers, pilgrims and parallel market. A quick resolution of this unfinished business will be crucial to the projected economic recovery. We need to take immediate action as every day of delay creates additional challenge. It is a known fact that investments are moving every minute across the globe to the markets with the best operating investment climate and the exchange rate policy does facilitate or deter the movement to any jurisdiction. We badly need capital inflows and to me it makes sense to quickly implement policies that will attract enhanced inflows.

To be able to fund the 2017 budget of 7.3 trillion Naira and devote a substantial part to the economic sector development, we must quickly complete the deregulation of the downstream petroleum sector. Again we got quite close last June but stopped short of reaching the finishing line. It will be injurious to the national economy and may prevent the realization of the expected rebound if we return to paying petroleum subsidies to importers and marketers of finished petroleum products. NNPC has been reporting quarterly losses, probably due to the fact that they have begun to carry the bulk of the emerging new subsidies. Let us get done with this, once and for all and thereafter let the market regulate prices as is done for other products and services in the economy including critical and live-saving items like food and medicines. In my opinion it will tantamount to fool-hardiness to continue to fix price of petroleum products and postpone the inevitability. It is better done now than when we will be forced to make a dislocating and discomforting quantum jump like we made last June from 87 Naira to145 Naira per litre of PMS.

I often hear senior government officials lament about certain situations in the country. They speak about poverty, they complain about prison-congestion, poor quality of education, poor health statistics, poor justice system, poor security, poor – policing, poor power etc.  And I am like who are they complaining to? To me or to the citizens who put them in power to sort out these problems? What are they expecting us to do? When we review global comparative statistics, we find Nigeria continuously in the bottom quartile. Is it corruption perception index (CPI), global competitiveness index (GCI), Ease of Doing Business index (EBI), or is it Human Development index (HDI)-Infant mortality, maternal mortality or life expectancy? I know that pervasive corruption has been a major factor in keeping Nigeria where it ought not be, but we cannot get out of any of these situations by lamenting or complaining to hapless citizens. Thus far progress has been very slow.

I have always thought the way to go was to do a baseline study to understand where we are, how we got there and then determine how to get out of the situation in a planned, measured and targeted process. Some call it strategic planning. I believe that some of that may be going on right now. I understand the Ministry of National Planning & Budget is busy working on this. But time is of essence. How soon will implementation start? And how sustained will the implementation be? Do we have the resources to ensure a seamless implementation? Have we aligned the legislative arm of government to quickly provide the legislative framework to allow speedy implementation of the action plans? How soon will the 2017 budget be approved and is there anything that can be done to accelerate this? These should be the questions that agitate the minds of our senior government officials on a daily basis.

When these questions are appropriately answered, then they can begin to sell or communicate their plans in a manner that will elicit citizen buy-in and support. Such communication will therefore identify the problem, define the plan to solve the problem and set the time line for action to begin, and if possible when the actions will end and what benefits will result. That kind of communication inspires confidence and believability. It shows that our leaders do not only understand the problems, but that they have well articulated plans to solve the problems and also have the capacity to faithfully implement the plans. I am not necessarily a fan of President Donald Trump of the United States and certainly do not agree with all of his actions, but his actions in only two weeks of coming into office inspire confidence in those who elected him into office. He identified the problems, said what he would do about the problems and hit the ground running. For good or for bad, American voters can see a decisive leader, who is not just complaining or lamenting but taking actions to change things. That is how real change gets accomplished.

I am anxious to see Nigerians begin to experience recovery in their businesses and indeed in their quality of lives. Propaganda will not do it. Lamentations will not help. Quick and ordered implementation of well thought out plans will do it. Can we accelerate please.

 Mazi Sam Ohuabunwa OFR